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Exhibit 10.32
September 24, 1997
Xx. Xxxxx Xxxxxxx
Bioclear Technology Inc.
Box 13 Grp. 524 XX 0
0000 Xxxxxxx Xxxxxx
Xxxxxxxx, Xxxxxxxx
X0X 0X0
Dear Sir:
CONFIRMATION OF CREDIT FACILITIES
---------------------------------
Further to our recent discussions, we are pleased to confirm the Credit
Facilities described below subject to the following terms and conditions.
DEFINITIONS: The definitions attached hereto in Schedule "A" are
incorporated in this agreement by reference as if set
out in full herein.
BORROWER: BIOCLEAR TECHNOLOGY INC. (the "Borrower").
LENDER: Royal Bank of Canada (the "Bank"), through its Branch
at 000 Xxxxxxx Xxxxxx, Xxxxxxxx, Xxxxxxxx (the
"Branch of Account").
CREDIT
FACILITIES: The Credit Facility in the total principal amount of
US$3,000,000 is available in the following segments
at the Borrower's option to the maximum Canadian
equivalent of $4,000,000.
Segment (1) Demand Operating:
-----------
a) Royal Bank Prime based
loans ("RBP Loans")
b) Bankers' Acceptances
("B/A's").
c) Match Funded Base Rate
Loans ("MFBR Loans").
d) Standby Letters of
Credit and/or
Guarantees, ("L/G's").
Segment (2) Corporate Visa Account, the
----------- terms and conditions of which
are set out under separate
agreement with the Bank.
(collectively, "the Borrowings")
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BIOCLEAR TECHNOLOGY INC.
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AMOUNTS: Segment (1) $3,900,000
-------- -----------
Segment (2) $ 100,000
-----------
PURPOSE: Segment (1) Operating purposes.
-------- -----------
Segment (2) Travel and entertainment
----------- expense for employees.
REPAYMENT: Segment (1)
---------- -----------
Notwithstanding compliance with the Covenants section
herein, Borrowings under this segment are repayable
on demand.
Upon demand of Segment (1), the Borrower shall pay to
the Bank all Borrowings under this agreement
including the face amount of borrowings ascribed to
all B/A's, L/C's and L/G's which are unmatured or
unexpired, which amount shall be held by the Bank as
collateral security for the Borrower's obligations to
reimburse the Bank for any payment made by the Bank
in respect of such all B/A's, L/C's and L/G's. The
Bank may enforce its rights to realize upon its
security and retain sufficient funds to cover amounts
outstanding by way of these instruments.
Segment (2)
-----------
As per cardholder agreement.
AVAILABILITY: Segment (1)
------------- -----------
The Borrower may borrow, repay, convert and reborrow
up to the amount of this operating segment.
B/A's shall be issued for not less than $500,000.00
and shall be in multiples of $100,000.00 and shall
have a term of not less than 30 days and not more
than one year.
MFBR Loans shall be issued for not less than
$1,000,000.00 and shall have a term of not less than
one year and not more than 5 years.
L/C's will have sight drawings and bills of lading
will be made payable to the order of the Bank.
L/G's will be issued for periods not exceeding one
year, except with the agreement of the Bank
The credit facility is made available at the sole
discretion of the Bank and the Bank may cancel any
unutilized portion of these segments at any time and
from time to time upon reasonable notice.
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BIOCLEAR TECHNOLOGY INC.
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INTEREST
RATES & FEES: Segment (1) a) Royal Bank Prime ("RBP").
------------- -----------
b) RBPAF
c) Scheduled rates for MFBR
term loans
d) L/C's/L/G's (see below)
LETTERS OF CREDIT
-----------------
Financial Guarantees: Non-Financial Guarantees:
--------------------- -------------------------
$0 - $50,000 1.625% $0 - $50,000 1.500%
$50,001 to $200,000 1.500% $50,001 to $200,000 1.375%
$200,001 to $500,000 1.375% $200,001 to $500,000 1.250%
$500,001 to $1,000,000 1.250% $500,001 to $1,000,000 1.125%
Over $1,000,000 1.125% Over $1,000,000 1.000%
SIGHT L/C'S
-----------
DRAWN WITHIN
------------
TERM OF DRAFT
0 - 90 DAYS 91 - 120 DAYS
------------------------------------------------------------------------------------------------------------
Sight .3125% .3750%
1 - 30 Days .4425% .5050%
31 - 60 Days .5725% .6350%
61 - 90 Days .7025% .7650%
91 - 120 Days .8325% .8950%
121 - 150 Days .9625% 1.0250%
151 - 180 Days 1.0925% 1.1550%
Over 180 Days Additional .13% for each 30 days or part thereof
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BIOCLEAR TECHNOLOGY INC.
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PAYMENT OF
INTEREST & FEES: RBP Loans and MFBR Loans
---------------- ------------------------
Interest on these loans shall be computed on the
daily principal amounts outstanding, at the
aforementioned rates, based on the actual number of
days elapsed divided by three hundred and sixty five
(365), and shall be payable in arrears on or about
the 26th of each month.
B/A's
-----
Upon the Bank accepting B/A's hereunder, the Borrower
shall forthwith pay to the Bank a stamping fee equal
to the RBPAF in effect at the time of acceptance plus
1% per annum, the whole calculated on the face amount
of each accepted B/A and on the basis of the number
of days in the term of such B/A and based on a year
of 365 days or 366 days, as the case may be.
L/C's
-----
Fees and out-of-pocket expenses are payable when the
drawings are paid.
L/G's
-----
The Borrower shall pay fees at the rate set forth
above in advance at the time of issue of the L/G.
This fee shall be based upon the amount of the
instrument issued and shall be calculated on the
number of days that it will be outstanding.
The yearly rates of interest to which the rates
determined in accordance with the Payment of Interest
and Fees section of this agreement are equivalent,
are the rates so determined multiplied by the actual
number of days in the calendar year and divided by
three hundred and sixty-five (365).
GENERAL
INDEMNITY: The Borrower shall reimburse the Bank for any
---------- additional costs or reduction of income arising as a
result of the imposition of increase in taxes (other
than on the overall net income of the Bank) on
amounts paid by the Borrower to the Bank, any
imposition of or increase in reserve requirements, or
the imposition of any other condition affecting the
Credit Facility by any governing governmental agency
or body, tribunal or regulatory authority.
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BIOCLEAR TECHNOLOGY INC.
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COLLATERAL
SECURITY: THE FOLLOWING COLLATERAL IS HELD AND WILL BE RELEASED
--------- UPON MATURITY OF B/A'S PREVIOUSLY REQUIRED BY THE
BORROWER TOTALLING $2,500,000:
General Security Agreement.
Fixed and Floating Charge Debenture in the amount of
$2,000,000.
Business Loan Insurance or Assignment of Life
Insurance on the life of Xxxxx Xxxxxxx in the amount
of $2,000,000.
Business Loan Insurance or Assignment of Life
Insurance on the life of Xxxxx Topnik in the amount
of $1,060,000.
Business Loan Insurance on the life of Xxxxxx Xxxxxxx
in the amount of $2,500,000.
Guarantee & Postponement of Claim in the amount of
$2,400,000 signed by Bioclear Tech Sales Inc.
General Security Agreement signed by Bioclear Tech
Sales Inc.
AFTER MATURITY OF B/A'S, COLLATERAL SECURITY WILL
CONSIST OF:
Guarantee & Postponement of Claim in the amount of
$3,000,000 U.S. Dollars to the maximum Canadian
equivalent of $4,000,000 signed by Waterlink, Inc.
supported by Directors Resolution.
The foregoing is security for the within facility as
well as for any "Future Rate Agreement" between the
Borrower and the Bank heretofore or hereafter made
and all other obligations of the Borrower to the
Bank.
In the event of any contradiction between the terms
of this letter and any security taken and given
pursuant hereto, the latter shall govern.
EVIDENCE OF
INDEBTEDNESS: The Bank shall open and maintain at the Branch of
------------- Account accounts and records evidencing the
Borrowings made available to the Borrower by the Bank
under this agreement. The Bank shall record the
principal amount of such Borrowings, the payment of
principal and interest on account of the loans, and
all other amounts becoming due to the Bank under this
agreement.
The Bank's accounts and records constitute, in the
absence of manifest error, PRIMA FACIE evidence of
the indebtedness of the Borrower to the Bank pursuant
to this agreement.
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BIOCLEAR TECHNOLOGY INC.
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The Borrower authorizes and directs the Bank to
automatically debit, by mechanical, electronic or
manual means, any bank account of the Borrower for
all amounts payable under this agreement, including
but not limited to, the repayment of principal and
the payment of interest, fees and all charges for the
keeping of such bank accounts.
REVOLVEMENT: The Bank shall establish an account (the "Revolvement
------------ Account") for the conduct of the Borrower's day to
day banking business other than pursuant to this
agreement and if the balance in the Revolvement
Account:
a) is a credit, the Bank may apply the amount of
such credit or any part thereof, rounded to
the nearest $5,000.00, as a repayment of
Borrowings then due and owing outstanding
under Segment (1), or
b) is a debit, the Bank shall make available a
Borrowing in an amount, rounded to the nearest
$5,000.00 provided there are sufficient funds
available under Segment (1) of the Credit
Facility.
REPRESENTATIONS
AND WARRANTIES: The Borrower represents and warrants to the Bank that:
---------------
a) it is a corporation validly incorporated and
subsisting under the laws of Canada; and that
it is duly registered or qualified to carry on
business in all jurisdictions where the
character of its properties or the nature of
its business makes such registration or
qualification necessary;
b) the execution and delivery of this agreement
has been duly authorized by all necessary
actions and does not violate any law or any
provision of its constating documents, or
result in the creation of any encumbrance on
its properties and assets except as
contemplated hereunder;
c) The Borrower is in compliance with all
applicable statutes, regulations, orders and
by-laws enacted or adopted for the protection
and conservation of the natural environment;
NON-MERGER: The provisions of the agreement shall not merge with
----------- any security given by the Borrower to the Bank, but
shall continue in full force for the benefit of
the Parties.
COVENANTS: The Borrower agrees:
----------
a) To pay all sums of money when due under this
agreement;
b) To provide the Bank with opening balance sheet
of Bioclear Technology Inc. once available;
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BIOCLEAR TECHNOLOGY INC.
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c) To provide the Bank quarterly with
consolidated management prepared Financial
Statements within 45 days of quarter end;
d) To provide the Bank annually with Review
Engagement Financial Statements for Bioclear
Technology Inc. within 120 days of year end;
e) To provide the Bank annually with audited
consolidated Financial Statements for
Waterlink, Inc. within 120 days of year end;
f) To provide the Bank annually with Notice to
Reader Financial Statements for Bioclear
Technology (USA) Inc. within 120 days of year
end;
g) The default by the Borrower or Guarantor or
any subsidiary of the Guarantor under any
obligation to repay borrowed money in excess
of $1,000,000, or in the performance or
observance of any agreement or condition in
respect of such borrowed money, and as a
result of such default the maturity of such
obligation is accelerated unless being
contested in good faith by appropriate
proceedings;
h) The Borrower and its subsidiaries not to or
allow any of its subsidiaries to grant,
create, assume or suffer to exist any
mortgage, charge, lien, pledge, security
interest, or other encumbrances affecting any
of its properties, plant and equipment and
inventory in addition to accounts receivable,
except as otherwise permitted pursuant to the
Credit Agreement dated as of June 27, 1997,
among Waterlink, Inc., the Bank of America
National Trust & Savings Association
(previously known as Bank of America Illinois)
and the financial institutions from time to
time party thereto (the "Waterlink Credit
Agreement");
i) Not to declare or pay dividends without the
approval of the Bank, except as otherwise
permitted pursuant to the Waterlink Credit
Agreement;
j) To file all material tax returns which are or
will be required to be filed, to pay or make
provision for payment of all material taxes
(including interest and penalties) and other
Potential Priority Claims which are or will
become due and payable and to provide adequate
reserves for the payment of any tax, the
payment of which is being contested;
k) Not to sell, transfer, convey, lease or
otherwise dispose of any part of its property
or assets, without the prior written consent
of the Bank, except in the ordinary course of
business, except as
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BIOCLEAR TECHNOLOGY INC.
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otherwise permitted pursuant to the Waterlink Credit Agreement;
l) Not to, directly or indirectly, guarantee or
otherwise provide for, on a direct or indirect
or contingent basis, the payment of any monies
or performance of any obligations by any third
party except as provided herein, except as
otherwise permitted pursuant to the Waterlink
Credit Agreement;
m) To give the Bank 30 days prior notice in
writing of any intended change in the
ownership of its shares, except as otherwise
permitted pursuant to the Waterlink Credit
Agreement;
n) To insure and to keep fully insured all
properties customarily insured by companies
carrying on a similar business;
o) Not to change its name or merge, amalgamate or
consolidate with any other corporation, except
as otherwise permitted pursuant to the
Waterlink Credit Agreement; and
p) To comply strictly and in all respects with
the requirements of environmental laws and to
notify the Bank immediately in the event of
any release or discovery of any contaminant
at, upon, under, over or within its property
or any contiguous real property or any real
property to which a contaminant could
reasonably be anticipated to be released. The
Borrower agrees to promptly forward to the
Bank copies of all orders, notices, permits,
applications or other communications and
reports in connection with any release or the
presence of any contaminant or any matters
relating to environmental laws as they affect
its property.
EXPENSES: The Borrower agrees to pay all of the Bank's costs
--------- incurred from time to time in the preparation,
negotiation and execution of this agreement and the
collateral security, and any costs incurred in the
operation or enforcement of this agreement or any
other agreement entered into pursuant to this
agreement.
GAAP: Unless otherwise provided, all accounting terms used
----- in this agreement shall be interpreted in accordance
with Canadian Generally Accepted
Accounting Principles from time to time.
SEVERABILITY: If any provision of this agreement is or becomes
------------- prohibited or unenforceable in any jurisdiction, such
prohibition or unenforceability shall not invalidate
or render unenforceable the provision concerned in
any other jurisdiction nor shall it invalidate,
affect or impair any of the remaining provisions.
GOVERNING LAW: This agreement shall be construed in accordance
-------------- with and governed by the laws of the Province of
Manitoba and of Canada applicable therein.
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BIOCLEAR TECHNOLOGY INC.
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ASSIGNMENT: This agreement shall be binding upon and enure to the
benefit of the Bank and the Borrower and their
respective successors and permitted assigns.
No part performance of any obligation under this
agreement shall be accepted, or be deemed to be
accepted, by the Bank in full satisfaction of the
entire obligation unless expressly accepted in
writing.
All notices and other communications by the
provisions hereof required or permitted to be given
by one Party to the other(s) shall be given in
writing and sent by registered mail, postage prepaid,
or delivered in person; in the event that postal
service is interrupted or substantially delayed,
delivered in person only; to such other(s) addressed
as follows:
a) In the case of the Bank, to:
Royal Bank of Canada
Business Banking Centre
9th Floor - 000 Xxxxxxx Xxxxxx
Xxxxxxxx, Xxxxxxxx
X0X 0X0
b) In the case of the Borrower, to:
Bioclear Technology Inc.
Xxx 00 Xxx. 000 XX 0
0000 Xxxxxxx Xxxxxx
Xxxxxxxx, Xxxxxxxx
X0X 0X0
c) In the case of the Guarantor, to:
Waterlink, Inc.
0000 Xxxxxxx Xxxxxx, XX
Xxxxxx, XX
00000-0000
or to any other address(es) in respect of which
notice has been given pursuant hereto, and shall be
deemed to have been effectively given and received on
the third business day next following the date of the
posting thereof, if mailed, and on the day of the
delivery thereof, if delivered in person.
ACCEPTANCE: This offer expires if not accepted by September 29,
1997, unless extended
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BIOCLEAR TECHNOLOGY INC.
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in writing by the Bank.
If this agreement is acceptable, kindly sign and return the attached copy to the
Bank.
Yours truly,
W.H. (Xxxxx) Xxxxxxxxxxx
Senior Account Manager
988-4288
Encl.
We acknowledge and accept the within terms and conditions.
BIOCLEAR TECHNOLOGY INC. WATERLINK INC.
Per: /s/Xxxxxxx X. Xxxxxxxx Per: /s/Xxxxxxx X. Xxxxxxxx
Assistant Secretary Chief Financial Officer
Per: _____________________ Per: ___________________
Date: September 24, 1997 Date: September 24, 1997
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SCHEDULE "A"
------------
Schedule "A" to the letter agreement dated as of the 18th day of November, 1997,
between BIOCLEAR TECHNOLOGY INC. as the Borrower, and Royal Bank of Canada, as
the Bank.
For purposes of the foregoing agreement, the following terms and phrases shall
have the following meanings:
"B/A'S" mean bills of exchange drawn on the Bank by and payable to the order of
the Borrower, which have been accepted by the Bank;
"CANADIAN DOLLARS" and "CDN$" mean lawful money of Canada;
"RBP" means the annual rate of interest announced by the Bank from time to time
as being a reference rate then in effect for determining interest rates on
Canadian Dollar commercial loans in Canada.
